Solution-Estimate the departmental overhead rates

Estimate the departmental overhead rates

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Reference no: EM132800207

Problem - Below are the expenses for 6 months' time of a workshop. You are required to estimate the departmental overhead rates for each of the production department assuming that overheads are recovered as a percentage of direct material.

Expense	$
Rent and taxes	300
General overheads	400
Motive power	250
Lighting power	400
Stores overhead	500
Depreciation	1000
Repair and maintenance	2000
Amenities to staff	1800
Lubricating oil and consumable stores	300
Insurance	500
Electricity	1000
Supervision	800

Additional information:

Item		Production Dept.			Service Dept.
		A	B	C	D	E
Direct material	$	2500	2100	3000	4000	2000
Direct wages	$	1500	1800	1300	1400	1600
Staff	No.	50	90	40	70	30
Area occupied	Sq. yrds	150	100	125	150	130
Value of asset	$	80,000	1,00,000	1,25,000	30,000	20,000
No. of requisitions		20	25	30
Light points	No.	30	35	40	25	30

Apportion the expenses of service department D in the ratio of 5:2:3 to the various Production depts. For the service department, on the basis of 'direct material'.

Reference no: EM132800207

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Estimate the departmental overhead rates

Reference no: EM132800207

Reference no: EM132800207

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